NXP Semiconductors and Taiwan’s Vanguard International Semiconductor Corp have announced a significant US$7.8 billion joint venture to establish a silicon wafer production facility in Singapore. This partnership is part of a broader trend among chipmakers to diversify their manufacturing bases.

Vanguard will invest US$2.4 billion for a 60% stake in the venture, while NXP will contribute US$1.6 billion for a 40% stake. The two firms will also allocate an additional US$1.9 billion to enhance the plant’s long-term capacity.

Factory Details:
Construction of the new facility is slated to commence in the second half of 2024, with production expected to start in 2027. By 2029, the plant aims to produce 55,000 300 mm wafers each month, supplying capacity to both NXP and Vanguard.

These wafers will primarily be utilized to manufacture mature technology-node chips for various applications, including vehicles, mobile devices, consumer electronics, and industrial products. The demand for these legacy chips surged during the COVID-19 pandemic, and it continues to rise.

Context and Background:
The move comes as tensions with China have led TSMC, which owns approximately 28% of Vanguard, to explore shifting some of its manufacturing operations out of Taiwan. Singapore, with its relatively low tax rates and proximity to China—the world’s largest semiconductor market—has become an attractive destination for chip manufacturers.

In recent years, other significant investments have been made in Singapore’s semiconductor industry, including US$5 billion from Taiwan’s United Microelectronics Corp for a new factory and US$4 billion from GlobalFoundries for a chip fabrication plant.

NXP’s spokesperson stated that this investment is one of the largest in the company’s history and will enhance “geographical diversity for our most strategic technology nodes.” The joint venture is projected to create approximately 1,500 jobs in Singapore.